The following is a snapshot overview of the FY24 proposed budget in detail (note: these are subject to change between now and June 30, 2023):
This budget is based on what we understand to be our revenue and expense projections and a fairly balanced understanding of Holyoke’s municipal service needs. State revenue and expense projections are based on the Senate Preliminary Budget. We are also anticipating another year of increases (year 3 of 6 years) in net school aid due to the impact of the Student Opportunity Act, which has been a major contributor to the overall impact of our budget along with transportation costs. Although the cost for school transportation is going up, our procurement department together with the school department has been able to save the city roughly $2 million over 5 years through creative changes in the competitive procurement process.
The proposed budget includes moderate revenue increases in net local revenue growth however these estimates remain conservative to help continue to mitigate any circumstances that contribute toward uncertainty. In addition to this, it’s important to note we are using ARPA revenue replacement funds as a maneuvering tactic while our financial team continues to work toward leveraging new sources of revenue and getting a grasp of our full revenue potential. The budget does not propose a Proposition 2½ Override or any reduction in services. The budget I am presenting also leaves on the table a surplus of $1,205,490 from the levy limit. Because of the conservative estimations of receipts and the maximum new growth potential not yet realized, our excess capacity may be greater than anticipated which offers the city even more flexibility to pivot under unforeseen circumstances, further plan for service needs, and also remove dependency of ARPA replacement funds in near future. The budget is a moving target with new revenue projections being realized every day. We will know more about our revenue limit as we get closer to the fiscal year-end and calendar year-end prior to setting the tax-rate. I anticipate to make additional adjustments to the budget as we get closer to calendar year-end so that we can strike a better budgetary and service need balance.
Although the city is looking forward to seeing moderate growth in some local revenues—the tax base, one of the largest sources of revenue for the city, is always limited by Proposition 2½ regardless of economic factors. This budget relied on a combination of conservative budget controls, creative budgeting solutions, and moderate favorable growth in local revenues and state aid to develop a balanced budget and no need for a Proposition 2½ override. Our largest increases are overwhelmingly due to uncontrollable related expenses such as retirement and the school budget. Historically, we have seen increases in health insurance but for the first time in a while, we expect a reduction in health insurance costs. Also, there are increases in salaries across all departments from negotiated union contracts. These increases are a result of our ongoing efforts to retain employees and prevent turnovers so we can continue to limit disruption and better mitigate negative impact to local services, as well as to maximize on the city’s potential to collect new revenue and properly navigate quality-of-life issues.
In this budget we continue to focus on internal controls and are pausing any proposed COLA increases for non-union employees, pausing on filling some vacancies, and pausing on introducing some new positions until we have a clearer picture of our revenue position during calendar year-end before setting the tax rate. The one position I am introducing in this budget I want to highlight to support our ongoing effort to strengthen internal controls is adding a Chief Administrative and Financial Officer (CAFO) which has been a position recommended by the Massachusetts Division of Local Services during past financial management reviews for the City of Holyoke.
With all this being said, in this budget we can expect the following notable changes, but not limited to:
- Increases in salaries through budget per negotiated union contracts.
- A hold on COLA increases for non-union employees until revenues are clearer closer to year-end.
- A hold on filling open positions and creating new positions in various departments until revenues are clearer.
- Retirement: Increased by 2% adding an additional $218,316.
- Health Insurance: Decreased by ($484,655) due to healthier workforce and also city taking a hard look at alternative options which is causing competition.
- Streetlights: Decreased by ($180,592) due to energy savings.
- School Department:
- Net School Spending Increase – roughly $600,000
- HPS Transportation Increase – roughly $700,000
- Charter School Transportation Increase – roughly $465,000
- TOTAL Increase – $1,765,000
- City Council: $13,500 added to budget so that City Councilors can attend the Massachusetts Municipal Association Annual Meeting & Tradeshow.
- City Council: Office & Professional Supplies increase to absorb proclamation costs – an increase of $1,000.
- Mayor’s Office: Public/Dignitary Receptions – $1,500
- Mayor’s Office: Chief Financial Administrative Officer (CAFO) – $125,000.
- OPED: removed open position of Planner II, totaling ($57,151).
- Police Department: Removed 4th Captain position, totaling ($121,355).
- Police Department: Increased Regular Overtime by $50,000.
- Fire Department: Added a Special Events Overtime line item to allow for code enforcement to take place at community events that are outside of normal working hours – $30,000.
- Building Department: Removed open position of Assistant Building Commissioner – ($82,641).
- Added a budget for the Department of Weights & Measurers totaling $70,785.
- DPW: moved part-time clerk from Municipal Parking to Admin as fulltime Principal Account Clerk which added $28,489 to the budget, now totaling $$50,260.
- DPW: Reduced open HMEO positions by four totaling ($142,248).
- DPW: Reduced open park maintenance position by one totaling ($42,713).
- DPW: Added $75,000 for a Grant Writer to leverage federal dollars for infrastructure improvements.
- Library: Removed open position of part-time Financial Manager – ($24,359).
- Library: Removed $15,000 for books.
- Purchasing & Procurement: Centralized costs for EZ-pass, Verizon Wireless, and Verizon landlines.
- Wistariahurst Museum: Increased part-time Office Assistant to full-time by $11,850.
Our free cash has not been certified yet by the Massachusetts Division of Local Services, but it will be very soon. I anticipate we will have a healthy amount of available free cash. At that time, I will be presenting to the City Council a series of requests for how we invest the funds for capital stabilization, emergency stabilization, a newly created OPEB trust, various capital needs, studies, and more.
Lastly, I want to bring to our community’s attention the need to act soon to address the sewer enterprise deficit. The sewer enterprise fund is currently being audited by an outside CPA thanks to the support of the City Council. We anticipate there will be a deficit within the existing enterprise budget which has been the case for many years causing taxpayers to subsidize the bill. The Board of Public Works and the Auditor will soon be reviewing recommendations with the City Council for a longer-term sustainable financial plan. Residents and the City Council need to recognize the critical value of sewer operations and its impact to taxpayers and find a way to equitably fund the budget gap. I am looking forward to working with you through this process so we can finally address this longstanding issue.
It’s really important for me to share with the public that the progress we have achieved to-date is largely thanks to our City Council. Without their support in many of the initiatives designed to achieve incremental progress on how we manage resources and provide services, it would be difficult to get anything done. Although we have made a lot of progress in how we manage our resources and offer services, I want to be the first to admit we still have a lot of work to do. However the Council decides to offer support in this proposed FY24 budget, I will be sure to work within the limits of what is made available.
Respectfully submitted,
Joshua A. Garcia, Mayor